Saudi Arabia, Egypt and three other Middle East countries have severed ties with Qatar. The dispute is over accusations by the five countries that Qatar has supported terrorist groups. The nations are pulling their diplomats, closing borders and cutting off air and sea traffic with Qatar. Marketplace's Adriene Hill talked with Simon Henderson, director of the Gulf and Energy Policy Program at The Washington Institute, about the diplomatic situation in the Gulf.
The following is an edited transcript of their conversation.
Adriene Hill: There have been tensions here in this region for a long time, and I wonder if you just give us a brief history lesson.
Simon Henderson: Oh, my goodness. The problem of Qatar in the region is the story of a small country and a big country. The small country of Qatar and it's alongside Saudi Arabia. Qatar curiously has the largest or second-largest natural gas reserves in the world. But the result is that Saudi Arabia has this view of how Qatar should behave. And lo and behold, Qatar doesn't behave in that way, and it annoys the hell out of the Saudis.
Hill: What do you make of the timing in relationship to the president's visit to the region just a few weeks ago?
Henderson: The timing of this crisis is extraordinary. It essentially started off three days after President Trump was in Riyadh for a series of summits, including a summit between Saudi Arabia and the rest of the GCC countries, the Gulf Cooperation Countries, which showed what Saudi Arabia had hoped would be GCC unity and its alliance with the United States against Iran. That unity has collapsed in the last two weeks. And so this is a bit of a shock. It should be a shock to the White House that one of the accomplishments that they thought they'd got out of President Trump's trip appears to have evaporated already.
Hill: With the breakdown of diplomatic ties between these countries, what is the economic impact to the region there?
Henderson: Well, the cutting off of diplomatic relations has its own impact. And there have been several countries — Saudi Arabia and the Emirates, Bahrain, Egypt, and I understand one or two others which have cut off diplomatic relations today. Perhaps more significantly, Saudi Arabia and some of the Gulf states are cutting off air links, and Saudi Arabia has said it'll block the land border between the kingdom and Qatar. But Iran has already voiced support for Qatar on this particular issue, so it's only served to heighten regional tensions even more.
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Hill: And I understand that shut down really cuts off a large part of Qatar's food supplies. Is that correct? Was Saudi Arabia shutting down its land borders?
Henderson: Qatar may have a large amount of natural gas, but frankly, it pretty well imports everything else including, food. This is a particularly crucial time for food. It's the fasting month of Ramadan, which means, OK, people don't eat food or drink anything during the day. But in the evening after night has fallen, there are big feasts. And so if you are interfering with food supplies at a time like this, at the very least you're causing a rush on the supermarkets where people will go and grab whatever food there is available.
Hill: What are the potential implications for markets here in the U.S.?
Henderson: Well, the principal impact on the U.S. would be if there's any impact in the oil price. We could have a political crisis of considerable dimensions in the Gulf. This might impact on the supply of oil, and it could very well impact on the price of oil.